Section 80D

What is Section 80D of the Income Tax Act?

Section 80D of the Income Tax Act, 1961 offers tax deductions of up to ₹25,000 on health insurance premiums paid in a financial year. The tax deduction limit increases to ₹50,000 per fiscal year for senior citizens aged 60 years and above. Individuals can claim tax deductions under Section 80D on a health insurance policy purchased for themselves, their spouse, dependent children and parents.

Tax deductions available under Section 80D are over and above those claimed under Section 80C of the Income Tax Act.

Tax Deductions Under Section 80D

Check out the tax deduction available to an individual under Section 80D of the Income Tax Act as of FY 2023-24:

Who is Eligible for Tax Deductions Under Section 80D?

Only individuals and Hindu Undivided Families (HUFs) are eligible for tax deductions under Section 80D of the Income Tax Act, 1961. NRIs who pay tax in India can also claim tax deductions on health insurance premiums paid to an insurance company in India under Section 80D of the Income Tax Act.

Any other entity, such as an organization or firm, cannot claim tax deductions under Section 80D.

What Deductions are Allowed Under Section 80D?

Under Section 80D, an individual or HUF can claim tax deductions for the following:

• Health insurance premium paid for self, spouse, children and parents
• Payments made towards preventive health check-ups
• Medical expenses incurred on maintaining the health of senior citizens without any medical insurance
• Contributions made to any government health insurance scheme

How Much Tax Deduction is Allowed Under Section 80D?

Section 80D allows a tax deduction of up to ₹25,000 per financial year on medical insurance premiums for non-senior citizens and ₹50,000 for senior citizens. This limit also includes a ₹5,000 deduction for any expenses paid towards preventative health check-ups.

Let’s understand the Section 80D tax exemption limit with the help of an example.

Suppose 40-year-old Dinesh has purchased health insurance for a premium of ₹35,000. As per Section 80D, he can claim a tax deduction of ₹25,000 as he is below 60 years. But Dinesh’s father, who is 65 years old, paid ₹55,000 as his medical insurance premium. In this case, his father can claim a tax deduction of ₹50,000, as he is a senior citizen above 60 years.

Just like Indian citizens, NRIs below 60 years can claim a tax exemption of up to ₹25,000 on health insurance premiums paid in a financial year. If the NRI is 60 years old or above, the tax deduction limit increases to ₹50,000 per fiscal year.

Section 80D Tax Deduction for Health Insurance Premiums Paid for Parents:

Health insurance premiums paid for parents are also eligible for the Section 80D tax deduction of up to ₹25,000 per financial year. If one or both parents are senior citizens, a Section 80D tax deduction of up to ₹50,000 can be claimed in a financial year.

For example, suppose Jitendra purchased a health insurance policy of ₹53,000 for his elderly parents, aged 62 years and 58 years. In this case, Jitendra can claim a tax deduction of ₹50,000 on the health insurance premium paid for his parents.

Section 80D Tax Deductions for HUFs:

Under Section 80D of the Income Tax Act, tax deductions on health insurance premiums are available to any member of the HUF. Just like an individual taxpayer, members of HUFs can claim tax deductions of up to ₹25,000 if their age is below 60 years. In case the HUF member is a senior citizen, a tax deduction of ₹50,000 is available.

For example, 30-year-old Akshay, who is a member of a HUF, purchased medical insurance for a premium of ₹28,000. Since Akshay is not a senior citizen, he can claim a tax deduction of ₹25,000 as part of the HUF. However, Akshay had also paid a mediclaim policy premium of ₹55,000 for his 61-year-old father, who is also part of the HUF. In this case, Akshay can claim an additional tax deduction of ₹50,000 for the health insurance premium paid for his senior citizen father.

What are Preventive Health Check-ups Under Section 80D?

Preventive health check-ups are frequent medical examinations conducted to identify an illness at an early stage and reduce the risk factors. The government introduced tax deductions on preventive health check-ups in FY 2013-14 to encourage people to monitor their health proactively. People can avail this tax exemption on the payment made towards preventive health check-ups undertaken for themselves, their spouses, children and parents.

As per Section 80D, a tax deduction of up to ₹5,000 per financial year can be claimed towards preventive health check-ups. However, this deduction on preventive health check-ups is included in the overall Section 80D limit of ₹25,000 for individuals below 60 years and ₹50,000 for senior citizens.

Let us understand the Section 80D deduction limit with the help of the example below:

Suppose Prashant has a family of six members, i.e. self (35), wife (34), two children (11 and 7), father (63), and mother (59). He purchased a family floater health insurance plan that covers him, his wife, and his children for a yearly premium of ₹30,000. He has also paid ₹47,000 for his parents’ medical insurance. Moreover, Prashant has paid ₹15,000 for his health check-up and ₹10,000 for his parents’ health check-up.

Check out the table below to understand the total tax deduction that Prashant can avail under Sec 80D of the Income Tax Act:

So, while Prashant incurred a total of ₹1,02,000 on health insurance premiums and preventive health check-ups of his family and parents, he could claim only ₹75,000 as tax deductions under Section 80D of the Income Tax Act in a financial year.

Mode of Payments Eligible for Section 80D Deductions

The following modes of payments are allowed to avail tax deductions under Section 80D:

Section 80D Deduction for Multi-year Health Insurance Premiums Paid in a Lump Sum

Many people buy multi-year health insurance to avail a long-term policy discount offered by insurance companies in India. If multi-year health insurance premiums have been paid in a lump sum at the time of policy purchase, policyholders can avail proportionate tax deductions per financial year under Section 80D of the Income Tax Act.

Moreover, just like 1-year health insurance policies, tax deductions on multi-year health insurance premiums are subject to an overall Section 80D limit of ₹25,000 for individuals below 60 years and ₹50,000 for senior citizens.

For example, Mohit paid ₹45,000 to buy a 3-year health insurance policy. In this case, he can claim a tax deduction of ₹15,000 per financial year under Section 80D.

Section 80D Deduction for Medical Expenses of Senior Citizens

As per Section 80D, medical expenses incurred on the health of a senior citizen without any health insurance are eligible for a tax deduction of up to ₹50,000 per financial year. However, if a senior citizen already has medical insurance, they will not be eligible for this Section 80D deduction.

For example, suppose Raj has paid ₹60,000 on the medical expenses of his senior citizen parents, who do not have a health insurance policy. In this case, he can claim a Section 80D medical expenditure tax deduction of ₹50,000.

Tax Deduction Under Section 80DD (Treatment of a Dependent with Disability)

Under Section 80DD of the Income Tax Act, people can claim a tax deduction of up to ₹75,000 per financial year on the medical expenses incurred on the treatment of a dependent who is a person with a disability. In case of severe disability of 80% or more, a Section 80DD deduction limit of ₹1,25,000 per financial year is allowed. Dependents can be spouses, children, parents, or siblings.

Moreover, tax deductions under Sec 80DD can be claimed if an individual has made annuity or lump sum payments for any scheme with LIC or any insurer for maintaining the health of the dependent person with a disability.

Section 80DD deduction is allowed on medical expenses incurred on the cost of medical treatment, nursing, training, and rehabilitation of a dependent with a disability. To avail this tax benefit, a medical certificate of disability issued by the central or state government’s medical board must be submitted at the time of filing income tax returns.

Section 80DDB Deductions (Treatment of Specified Illnesses)

As per Section 80DDB of the Income Tax Act, a tax deduction of up to ₹40,000 per financial year can be claimed on medical expenses incurred on the treatment of specified diseases, including malignant cancers, AIDS, chronic renal failure, dementia and Parkinson’s Disease. For senior citizens, the Section 80DDB medical expenditure tax deduction limit increases to up to ₹1 lakh per financial year.

However, proof of availing treatment for a specified disease has to be attached while filing income tax returns. Besides, people can claim Section 80DDB deduction on the medical expenses incurred on the treatment of themselves, their spouse, parents, children, and siblings.

Section 80D vs 80C

Many people get confused between Section 80D and Section 80C of the Income Tax Act, 1961. To clear the confusion, check out the basic differences between Section 80D and Section 80C:

Things to Remember When Availing Section 80D Deductions

Take a look at the things you must remember while availing tax deductions under Section 80D:

• Health insurance premiums paid in cash are not eligible for Section 80D deductions.
• If an individual and the parent have paid medical insurance premiums in part, then both can claim tax deductions for their paid amount under Sec 80D.
• Premiums paid for siblings, grandparents, uncles and aunts are not qualified for tax deductions.
• Premiums paid on behalf of working children are not eligible for Sec 80D deductions.
• Group health insurance premiums paid by the employer are not eligible for deductions under Section 80D.
• No deduction is provided on the service tax and cess amount added to health insurance premiums.

FAQs on Section 80D